China Property Weakness Persists Despite Policy Support

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3630-1.3880

Euro                 1.6040-1.6290

Sterling            1.8310-1.8560

WTI Oil (opening level) $57.18

The CAD/USD is opening at 1.3754 ( 0.7271 )

Canada’s Consumer Price Index data for November comes out today

Statistics Canada is expected to show that the headline inflation grew at an annualized pace of 2.4%, faster than 2.2% in October. Signs of price pressures rising at a faster pace would further diminish expectations of further interest rate cuts by the Bank of Canada (BoC) in the near term.

The BoC is unlikely to raise interest rates sooner as it reiterated in the monetary policy statement that the “current rate is at about the right level to keep inflation close to 2% as long as the economy and inflation evolve in line with projections”.

In the policy statement, the BoC also stated that the underlying inflation is still around 2.5%; however, the “CPI inflation will remain close to the 2% target as economic slack roughly offsets cost pressures linked to trade reconfiguration

Headlines

• Confidence among Japan’s large manufacturers hit a four-year high, with the BOJ’s quarterly Tankan business survey index rising to 15 from 14 in September, while large non-manufacturers held at 34, near early-1990s highs. A result that strengnthens the case for the BOJ to raise interest rates this week.
• The four-year downturn in China’s home prices, which has weighed on consumer sentiment and become a hurdle for economic growth, continued in November, with new-home sales and resale home values both falling. Officials are considering measures including mortgage subsidies and tax rebates to address the crisis. Retail sales and industrial production, also for November, both rose by less than expected, up 1.3% and 4.8% YoY versus expectations of 2.9% and 5%.
• Trump stated he is leaning towards Kevin Warsh or Kevin Hassett to lead the Fed and believes the next Fed Chair should consult him on interest rates.
• Fed comments on recent rate change: Goolsbee dissented from last week’s cut, preferring to await more inflation data despite expecting 2026 cuts, while Paulson was more dovish, prioritising labour market risks and seeing inflation easing next year. Cleveland Fed’s Hammack meanwhile said policy is around neutral, but she would prefer a slightly more restrictive stance to keep pressure on inflation, which remains above target and has been stuck near 3%. San Francisco Fed’s Daly ultimately backed this week’s rate cut despite calling it a difficult decision.

Key Points

• Equities: Wall Street slides on artificial intelligence margin worries, Europe slips with tech drag, while Asia firms on China fiscal support hopes
• Volatility: VIX mid-teens, event-heavy week, macro and central banks in focus
• Digital assets: BTC/ETH stable, ETHA weaker, UK crypto regulation, MSTR pressure
• Fixed Income: US yield curve steepens to new 2025 extreme as long dated US treasuries under pressure.
• Currencies: Yen firms Monday ahead of Friday’s key Bank of Japan meeting. The US dollar quiet.
• Commodities: Metals rebound after equity-led correction; oil steadies above key support